Essentially I'm asking about the origins of this strange story. Is any of it true? Are there any accepted historical explanations? Thanks in advance!
The story of the Green Children of Woolpit appears in several of the books by the authoritative British folklorist Katharine Briggs: Folk Tales of Britain and An Encyclopedia of Fairies. In the former, Briggs concludes, "This is one of those curiously convincing and realistic fairy anecdotes which are occasionally to be found in the medieval chronicles."
Legends - the folk oral narratives told to be believed - survive because they are so damn convincing. And when a lot of people tell similar stories, it becomes even more convincing. But if we are to start believing folk narrative, then we would have to concede the existence of every type of supernatural being one can imagine - from water monsters and mermaids to ghosts, gremlins, fairies, trolls, giants and dragons.
I always tell my students in folklore classes that it is not our job to prove that supernatural beings don't exist or that magical practices are ineffective. We are merely attempting to understand the stories people tell and the beliefs they embrace. That said, we, as folklorists, must not fall into the trap of accepting legends at face value - as realistic depictions of the world. While some stories may be true, it is equally possible that no stories are true. People tell stories about the fantastic because they are engaging and thrilling. The stories that are most convincing are passed along, and eventually appear in print.
Did the Green Children of Woolpit really exist? No one can say with certainty. Is it necessary for them to have existed to explain how their tale ended up in print? Absolutely not. The simpler hypothesis is that they did not exist and that this is just the sort of legend that people tell one another and pass along because it makes for such a good, intriguing story. But there will always be people who insist that these children really did exist, and from a folklorist's point of view, I find it intriguing that people still believe in this.